Brands chant the affordability mantra as they chase thrifty customers

According to Kantar's Covid-19 barometer, nearly everyone is experiencing increased anxiety over money
With the financial impact of the crisis hitting home, brands are treading the ‘begin-again’ economy with wary unease, armed with a set of familiar value-enhancing tactics to encourage consumer spending. Automakers are rolling out easy finance schemes, snacks brands have launched combo or value packs, fashion brands are staying off their luxury labels and several have announced ‘special sales days’ to mark their return, post lockdown. 

The rush to announce the next big sale or offer reflects the mood of the consumer, several reports and surveys indicate that it is a long time before the old spending habits come back. According to Kantar’s Covid-19 barometer (fifth wave), a global study tracking people’s attitudes, behaviours and expectations, nearly everyone is experiencing increased anxiety over money. 56 per cent of households across the world have now experienced a loss of income due to Covid-19. In India, the impact is even more acute, with 74 per cent of households having experienced a loss of income. Globally, the survey found that 53 per cent of consumers are paying more attention to products on sale and offering discounts and promotions is now the third highest expectation of brands.

Soumya Mohanty, chief client officer, South Asia, Insights Division, Kantar, explained the transition that brands must look at, in the report, “Brands will need to move from emotional succour and social solidarity to fundamentals of value, functionality, innovative delivery and simple mental availability.”

It is this understanding of the post-pandemic consumer that is leading auto brands, across price bands and segments, to rely on flexible finance schemes, for instance. Starting from the bottom of the pyramid, the TVS moped, to luxury brands such as Benz and BMW, all have a variation of an instalment-discount scheme. Maruti Suzuki has tied up with HDFC Bank for easy payment schemes and its executive director (M&S), Shashank Srivastava said, “This would particularly help customers in the entry level segments.” 

Hyundai has announced a monthly instalments assurance programme and Tarun Garg, director, sales, marketing and service said, “We understand customer aspirations of buying a vehicle, but they are worried about uncertainties such as employment loss. The EMI Assurance Program will give new Hyundai owners working in private organisations peace of mind during these times.” Some auto companies have easy-finance schemes for special categories of customers. For instance, Mahindra & Mahindra has a special scheme for doctors. Kathrin Frauscher, managing director and CEO, BMW India Financial Services said that the company had worked out a special offer to address possible apprehensions arising due to the economic impact of coronavirus and provide more space for liquidity during an uncertain time.

Not just auto brands, everyone is playing the discount-value game. Even hand washing soaps and detergents, packaged foods and snacks brands, fashion labels—from large players to start-ups, the focus everywhere is on value packs and discounts. Bulk packs and sachets that allow for affordable indulgences have become popular; Godrej Consumer Products has a hand wash in powder format under Godrej Protekt, which is available for Rs 15 a pack and can produce 200 ml of liquid handwash. Myntra has announced its big annual sale and several snacks brands are offering a mix of flavours and products in a single pack, sweetening the deal with discounts.

According to a report by EY (Covid-19 and emergence of a new consumer products landscape in India), “Re-evaluating the brand portfolio to win back consumers would entail re-adjusting pack sizes and pricing to re-define value proposition.” While the EY report is about consumer goods, a similar mindset is at work across categories, even for luxury labels. However, experts warn, one needs a sustainable and time-bound strategy for such schemes or else brands could end up devaluing their offering and turn into commodities stacked on a rack. 

Sandeep Goyal, brand strategist and founder Mogae Media says that auto brands do not really have a choice anymore. Already reeling under a slowdown, the lockdown has pushed them to the brink. But, what happens when all brands play the discount-offers game, does it not blur the differences? Goyal said, “It does become an equaliser, but that doesn’t any which way worry the customer. But brands have to wake up the ‘animal instincts’ of the consumer economy. Cutting prices or facilitating sales through finance falls short of that crucial wake-up and momentum.”

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